Insurance Estimates

May 7, 2018, 4:45 AM ·
I've heard that insurance appraisals for fine instruments are commonly inflated relative to replacement cost. Is that true? If so, typically by how much? For example if I see an insurance appraisal for $11,000, what should I be offering to buy that instrument?

Replies (8)

May 7, 2018, 5:15 AM ·
Insurance appraisals are generally set at what they think a realistic replacement cost will be, which is not necessarily what the buyer paid for it. The appraisal is also not necessarily current. And the selling price of an instrument is relative to market.

If it's a private sale with no commission involved, the price may also be lower than the buyer would receive if the seller also had to pay a shop commission. And auction prices are typically wholesale rather than retail.

Other negotiation factors also come into play. How long as the instrument been for sale? Does the seller need money now, or are they willing to wait for the right buyer to come along? Has there been a lot of interest, or not much? What's the condition of the instrument, and what type of work would you have to put into it?

So... it depends, basically. It's more like buying a house than buying a car.

May 7, 2018, 6:11 AM ·
As Lydia explains, there is much more that tells you about the value of an instrument than simply the insurance value. The condition, age, sound when played, do the strings need replacing, what are the quality of the strings, does the instrument appear symmetrical, is the bridge straight, are there visible wear marks on the instrument indicating a lot of use? Will the owner provide any documentation on the history of the instrument? I would want the answers to these questions before purchasing an $11,000 instrument. If you do not feel comfortable going alone, bring someone that has the experience necessary to help you assess the value of the instrument.

I've had the instrument looked over by an experienced luthier. (It has an issue, but it's something that my luthier says has probably been that way for a very long time.) The instrument also meets the enthusiastic approval of the intended player's teacher.

It's a private sale offered by someone we know, so what we are really after is a fair price. However, all we have in hand is an insurance appraisal, so we're trying to figure out how to handicap that figure. (Thanks Lydia for the useful suggestion to clarify the purchase scenario.)

So, what I'm basically asking is, if you have an instrument that you bought recently for a certain price (but in the $10k ballpark, so that it's at least comparable), have you also obtained an insurance appraisal, and if so, how did the appraisal compare to the purchase price? The figure that I've heard from others is about 20% and I'm wondering if that's a commonplace or "accepted" figure.

May 7, 2018, 7:43 AM ·
I don't think there's a useful algorithm for this, though 20% is a fair guess. You'd be better off trying to find "comps." Maybe look online and see what shops are asking for similar instruments. Auction prices are useful information but only as a real basement since auctions are wholesale.

May 7, 2018, 7:54 AM ·
I'd also stick to something around the 20 %. Did it that way with my violin, and a good friend (who happens to be also a good luthier) felt it was a good but fair price. You could also consult the Fuchs Taxe if the maker is known, but the book is quite expensive. Luthiers here mostly work with that when doing appraisals, not sure if it's the same in your country. I'd right away ask my luthier, and he'd give advice if he was the one I'd ask to do the restauration too.

Edited: May 7, 2018, 8:06 AM ·
for the record: using "do the strings need replacing, what are the quality of the strings" as criteria is equivalent to basing a house purchase on the color of the paint in the living room.

What I remember of my violins / bows in that price range is that the insurance appraisal tracked pretty closely to the purchase price - maybe at most $1k higher or so. They were bought through shops, though, not privately - so there's the shop's commission to factor into the purchase price.

May 7, 2018, 11:33 AM ·
IreneChecking the condition of the strings is simply an indicator of whether the instrument is being maintained or just sitting for years. I realize strings are not included in the actual value. It would be one of several things I would look at.

May 7, 2018, 2:04 PM ·
I don't think that anyone should care about the strings. Nor does the fact that the violin has been sitting for years affect value, although it might indicate that the sound will change after a playing-in period.

I agree with Mary Ellen. I would start with an offer 15% to 20% below the current appraisal, basically equivalent to a shop commission, and then negotiate from there.